[Chapter 15, page 244]

Donor Education and Philanthropic Advisors and Organizations

Making annual donations to local museums or an animal shelter calls for different knowledge and a different level of intensity than backing, and quarterbacking, an initiative to eliminate homelessness in the city. Therefore, a major factor in choosing structure for your philanthropy is the nature of the advice, support, and technical assistance you will need to carry out your objectives. In short, you have a choice between “renting” advisors by retaining consultants or “buying” them by hiring staff.

We mention three categories of external support:

• learning how to practice philanthropy
• advisory services
• strategic planning and evaluation
• information about potential grantees

Learning how to practice philanthropy: donor education programs. Among the programs designed to help individual donors learn about philanthropy, here are two with which we are familiar:

• The Philanthropy Workshop West (TPW West) provides a year-long intensive training program to a select cadre of donors from the West Coast who are seriously committed to becoming more effective, strategic, and global in their philanthropy. Its goal is “to create an active global association of strategic philanthropists with the skills, commitment and imagination to make a significant contribution to the pressing issues of the day.”[1] Participants in the TPW West program have the opportunity to create lasting relationships with political leaders, leaders in the non-profit sector and the foundation world, and other active philanthropists.
  The The Global Philanthropy Circle, Global Philanthropy Circle (www.synergos.org/philanthropistscircle), run by the Synergos Institute, brings together individuals and family philanthropies from many countries who share a concern for reducing global poverty. It provides workshops on strategy and evaluation and opportunities for peer learning as well as international trips to developing countries to meet with leaders of civic society, business, and government.

Advisory services. In Donor Advisors and Philanthropic Strategy, Thomas Backer and Lili Friedland describe the various services provided by philanthropic advisors and the questions they address:[2]

• Financial assessment - Do I have the financial resources to be philanthropic?
• Values clarification - What deeply-held values guide my philanthropic desires?
• Family involvement - To what extent should my other family members be involved?
• Selection - What philanthropic instrument(s) fit my tax, financial, legal and philanthropic circumstances?
• Structure - How will the philanthropic instruments I choose be created?
• Actions - What grants will be made or other actions taken to fulfill my plans?
• Learning and peer networking - What opportunities are there for me to learn more about philanthropy, either from direct experience or from contacts with peers?
• Collaboration - What opportunities are there for me to collaborate with other donors or foundations?
• Evaluation - How will I get input to improve my philanthropic strategy and measure progress towards my goals?

Assistance in setting up foundations or other structures and engaging in philanthropy—from strategic planning through grantmaking and evaluation—are provided by individual consultants, firms, and banks.[3] Rockefeller Philanthropic Advisors, Arabella Philanthropy, and The Philanthropic Initiative are examples of comprehensive philanthropic advisory services. These firms help donors identify goals, provide research and counsel on charitable giving and best practices, develop philanthropy programs, and offer administrative and management services for foundations and trusts, each tailored specifically to each client’s level of philanthropic involvement and goals. For clients who wish to start a foundation, for example, Rockefeller Philanthropic Advisers provides planning services ranging from analyzing a donor’s values and vision to develop a mission statement to advising on by-laws and governance to developing management systems.

A number of advisors serve philanthropists with particular needs. For example, Calvin Edwards & Co. works with donors to faith-based charities, helping donors find organizations and ministries that share their values and maximizing the good they do through strategic giving.

In addition to firms of this sort, an increasing number of banks, including JP Morgan, Citigroup, Wells Fargo, Bank of America, UBS and Deutsche Bank, provide high wealth clients with similar kinds of philanthropic services. Philanthropy-focused programs like UBS’s Philanthropy Services and Deutsche Bank’s Wealth with Responsibility advise clients on creating socially responsible investment portfolios, help clients set up new foundations, and assist clients in bequeathing philanthropic capital and enterprises to the next generation. For example, Wells Fargo’s Charitable Management Group offers foundation development, grant administration services, scholarship program administration, investment management and consulting services, foundation administration, and fax services.

Good philanthropic advisors can provide knowledge and expertise that it could take you years to acquire. For small, unstaffed family foundations, philanthropic advisors can do much of the work that a staff might do. And even large, staffed foundations make use of philanthropic advisors to supplement their own staff’s expertise. However, as Lucy Bernholz notes:

The legal, accounting, and investment services provided to philanthropy are part of well-monitored industries and operating under the professional standards and guidelines of those fields. The program advisory piece, however, stands out as a separate entity. There are no standards of practice, no recognizable professional or credentialing requirements, no oversight bodies (self-maintained or otherwise), and no common definition of what the product line is. Elements of those advisory services include mission setting, strategic planning, grants management, due diligence, issue research, evaluation, and technical assistance.[4]

Strategic Planning and Evaluation. In addition to some of those mentioned above, a number of consulting firms assist foundations in designing and evaluating strategies. These include the nonprofit arm of McKinsey & Co. http://www.mckinsey.com/clientservice/nonprofit/), The Bridgespan Group (a nonprofit spinoff of Bain & Co., www.bridgespan.org), the Redstone Strategy Group (www.redstonestrategy.com), FSG Social Impact Advisors (www.fsg-impact.org), Blueprint R&D (www.blueprintrd.com), and BTW – Informing Change (www.informingchange.com). The Center for Effective Philanthropy (CEP) provides executives and trustees the management and governance tools needed to define, assess, and improve overall foundation performance, with a belief that improved performance of funders, and in particular foundations, can have a profoundly positive impact on nonprofit organizations and those they serve.

Information about potential grantees

Donors have access to web-based information about the governance and performance of potential grantees:

• DonorEdge, created by the Greater Kansas City Community Foundation, provides donors to community foundations with access to extensive information about more than 650 local nonprofit organizations and allows visitors to quickly donate to any of the organizations listed. The model is now being used by the Greater Houston Community Foundation, The Community Foundation of Middle Tennessee, Denver’s Community First Foundation, Harrisburg, Pennsylvania’s The Foundation for Enhancing Communities, and is under development at The Columbus Foundation.
  
  
• GuideStar contains extensive financial information about more than 850,000 nonprofit organizations. GuideStar is gradually adding information about organizations’ strategies and goals—though it still has a long way to go in providing prospective donors with the ability to compare charities and monitor their performance.

We do not include websites that only provide information about an organization’s finances. Unless it is combined with information about an organization’s outcomes and impact, or at least good proxies for them, financial data can provide a misleading picture of an organization’s performance. Financial ratings in isolation erroneously imply that a donor can assess an organization’s administrative costs in isolation from its effectiveness. This is the equivalent of looking at only one side of a corporation’s financial statements. No less than in the private sector, a nonprofit organization should seek not to minimize but to optimize its costs so as to contribute net value to its mission. An organization may have low administrative costs and produce little of value. Indeed, some organizations with low costs may be under-investing in back-office functions that not only serve their goals but provide public accountability. In the business sector, low investment ratios at certain stages of an organization’s development would make investors nervous, not excited.[5]

Organizations

A number of membership organizations serve foundations through regular meetings and publications.

• The Association of Small Foundations is a membership organization comprised of 3,000 of these foundations – with asset sizes that range from the thousands to the tens of millions – that have few or no staff members. It hosts educational programs and publish resources that help these small foundations learn how to operate and how to succeed.
• The Council on Foundations is a membership association of more than 2,1000 grantmaking foundations and corporations that provides its members with technical assistance, research, publications, conferences and workshops, legal services, and a wide array of other services.
• Grantmakers for Effective Organizations (GEO) is dedicated to promoting learning and encouraging dialogue among funders committed to building strong and effective nonprofit organizations. GEO achieves this mission by commissioning and contributing to research, developing programs and products for its members, and building a community of practice that expands the resources available on nonprofit effectiveness.
• The National Center for Family Philanthropy provides information on starting and running a family foundation as part of its work supporting families engaged in any form of giving.
• Philanthropy Roundtable is a national association of individual donors, foundation trustees and staff, with a generally conservative approach. Their mission is to foster excellence in philanthropy, protect philanthropic freedom, assist donors in achieving their philanthropic intent, and to help donors advance liberty, opportunity, and personal responsibility in America and abroad.
• The Foundation Center maintains a comprehensive database on funders and their grants and operates research, education, and training programs to advance philanthropy.
• Independent Sector is a membership organization of charities, foundations, and corporate giving programs that supports both the independence of the nonprofit sector and its accountability.

Affinity Groups

In addition, foundations may belong to “affinity groups” of grantmakers with common interests, who share knowledge and engage in collaborative funding and gossip. Affinity groups may be formed around particular areas of grantmaking, strategic functions, or identity. For example:

• Grantmakers in the Arts (www.giarts.org), works to strengthen the field of private sector arts grantmaking by hosting an annual conference and other events, running a major periodical, conducting research, and providing communication services. It seeks to increase arts philanthropy and to support individual arts grantmakers in meeting their objectives. GIA represents over 300 organizations.
• Grantmakers for Education (www.edfunders.org), seeks to advance effectiveness in education grantmaking, with the goal of improving educational outcomes for all students. It facilitates sharing best practices, encourages networking and collaboration among its members, provides workshops and programs, and helps grantmakers improve their strategies for achieving results in education.
• Network for Smart Growth and Livable Communities (www.fundersnetwork.org) brings together funders, nonprofit organizations and other partners to address communities' environmental, social, and economic problems, The Network was formed in October 1999 by twenty foundations and became an independent nonprofit organization in July 2003.
• Youth Transitions Funders Group (www.ytfg.org) focuses on helping disconnected youth from ages 14 to 25 make a successful transition into adulthood. Its members are concerned with foster care, juvenile justice, and social policy.
• The Communications Network (www.comnetwork.org) is a function-focused affinity group that promotes communications as an integral component of strategic grantmaking. The Network provides services to expand the capacity of grantmakers to communicate more effectively.
• Hispanics in Philanthropy (HIP; www.hiponline.org) is a population-focused affinity group, working with funders to strengthen Latino communities and leadership, and to provide a network for Latino grantmakers. HIP's Funders' Collaborative for Strong Latino Communities project has raised nearly $35 million and has made grants to 427 Latino-led nonprofits across the Americas. HIP sponsors regional, national and international conferences and briefings, research and publications, and professional development programs; it also provides referrals for foundations seeking Latino staff and trustees.
  

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